Apple iPhone Sales Slump in China – Tim Cook Raises Vietnam Investment
Apple iPhone sales fall 10% globally. l Source: Justin Sullivan/Getty Images
Key Takeaways
- Apple’s iPhone shipments dropped 10% in Q1 2024, exceeding analyst predictions.
- The decline is largely due to Apple’s iPhone struggles in China.
- Huawei and Xiaomi have capitalized on the shifting market conditions, significantly impacting Apple’s market share.
Apple faced a steeper-than-anticipated decline of 10% in iPhone shipments during the March quarter, with Chinese sales notably slipping despite a resurgence in the broader smartphone market.
CEO, Tim Cook is visiting Hanoi, where he is expected to publicly announce Apple’s expanded commitments to Vietnam. This leaves many questioning whether he should prioritize strategies to recapture market share in China or focus on strengthening investments in Vietnam, potentially tapping into a burgeoning market with promising growth prospects.
iPhone Sales Drop In China
Apple shipped over 50 million iPhones in the first quarter of the year. This fell short of the 51.7 million average estimate projected by analysts surveyed by Bloomberg. This shows a decline of 9.6% decline compared to the previous year, the largest drop for Apple since the disruptions caused by Covid-related supply chain challenges in 2022.
Since the release of its latest model in September, the Cupertino-based tech giant has encountered difficulties in maintaining sales momentum in China. Increased competition from rivals such as Huawei and Xiaomi, coupled with a governmental ban on foreign devices in certain workplaces in Beijing, have collectively dampened iPhone sales in the region.
Throughout the pandemic, Apple‘s iPhone notably demonstrated resilience compared to many Android-powered competitors, as consumers scaled back on smartphone purchases. However, this resilience led to an inventory surplus, prompting aggressive pricing strategies from Chinese competitors like Xiaomi. As these rivals gradually deplete their excess stock and resume shipment increases, they pose renewed challenges to Apple’s market position.
Who’s Taking a Bite Out of Apple?
The decline in Apple’s sales, despite a thriving global market, has been attributed in part to challenges encountered in China. Local competitors such as Xiaomi and Huawei have intensified pressure on both Apple and Samsung. Concurrently, the Chinese government has enacted measures to restrict the use of devices manufactured by foreign companies in workplaces.
One prominent contender is Huawei, whose phone sales surged by 64% in the initial six weeks of 2024. Huawei made a comeback to the premium smartphone segment last year with the introduction of the Mate 60 Pro, a 5G-enabled device featuring an in-house processor.
Meanwhile, other brands like Honor, stemming from Huawei’s decision to spin off its budget smartphone division amidst US sanctions, are gaining traction in the market as they venture into higher-priced handhelds.
Xiaomi, recognized as the world’s third-largest smartphone vendor by IDC, is also making inroads into a sector that Apple has exited: electric vehicles. Earlier this year, the Chinese smartphone manufacturer unveiled its inaugural EV, the SU7. Within a span of 36 hours, the model garnered an impressive 120,000 orders. This prompted Xiaomi to caution potential buyers about a potential waitlist stretching over six months.
Additionally, Huawei’s unexpected resurgence last year, fueled by its domestically manufactured chips and HarmonyOS operating system featured in the Mate 60 series, has steadily eroded Apple’s share of China’s premium smartphone market since August.
Cook Reiterates Vietnam Commitment
In a statement , Apple announced its intention to boost investment in its suppliers in Vietnam, alongside its commitment to support a local initiative focused on providing clean water to schools. Since 2019, Apple has already injected nearly 400 trillion dong – equivalent to $16 billion – into the country through its network of supply chain partners.
Although specific details regarding the increased spending on suppliers were not disclosed, Apple’s CEO Tim Cook arrived in Hanoi on Monday morning for a two-day visit. During this time, he is scheduled to engage with Vietnamese programmers and content creators.
Over the past decade, Vietnam has experienced a significant rise, approximately fourfold, in the number of companies involved in assembling Apple products.
Cook’s visit coincides with a joint call from more than 60 human rights and environmental organizations urging Apple to publicly denounce the detention of climate activists in Vietnam.
Apple iOS 18: Will Google’s Gemini or OpenAI Power iPhone’s AI Capabilities?
